When shopping for free car insurance quotes online, you'll probably ask yourself why insurance rates vary so greatly from one insurer to another. After all, if you are interested in the exact same insurance coverage, shouldn't they be at least priced very closely? There are different factors that car insurance companies consider when calculating your rates. By understanding them the more equipped you become in finding cheap car insurance quotes.
Car insurance companies use different statistics and employ different methods when calculating insurance premiums. Some insurance companies are more specialized in certain policy areas and are more prepared and capable of providing discounts in those areas. This is why you may stumble upon surprisingly cheap car insurance quotes online.
Their set of statistical models and actuaries are used to analyze certain data regarding past claims. Their analysis of such data will help determine the likelihood of a policyholder to file an insurance claim in the future. If their study reveals a certain age group files claims more frequently than other demographics, the company will raise the insurance premiums for that particular group. Insurance rates will vary between companies because each of them will carry different sets of data.
There are general factors that always come into play when insurers calculate premiums. One of the key barometers is driving history, since it provides a glimpse of how a driver behaves behind the wheel. Age, gender and marital status are basic information they require as well. According to statistics, younger drivers and men are more likely to take more risks. Postal codes are also a determining factor, since they can suggest the likelihood of a vehicle to be stolen or damaged. Some companies also take credit history into account. The higher the credit score, the safer the driver is presumed to be when driving.
Each of these factors, most of which are universal among all companies, will give the insurer an idea of a driver's chances of filing a claim in the future. The company will raise your quotes in order to compensate for your associated risk. It also depends how much weight the company puts on a particular factor. For instance, some insurance companies put more weight on credit scores than others.
Aside from statistical models, the rates are also based on the company's business costs. Some insurance companies spend more on advertising or in the maintenance of their larger facilities and staff. These factors can impact that rates you will be given.
It is, therefore, important to do comparison shopping when planning searching for free car insurance quotes. The more you shop, the higher the chances of finding cheap car insurance quotes.